The unfavorable government plans for the credit card industry is preventing e-commerce companies in changing the interest rates on existing debts. It also includes a proposal that would prioritize the expensive debts when going through payments transactions. The sudden change may offer financial difficulties to credit card holders according to UK Cards Associations.
Thirty million people in the United Kingdom are presently holding sixty six million plastic cards. The business industry claims that an average of sixty two percent of the adults owns a credit card. But, the borrowing of the plastic cards among adults had decline over the past five years. At present, lenders are waiting for the approval of their credit card while the Government is making proposals such as discouraging unfair practices. It also gives warning to the business industry to clean up and change its terms and conditions.
The unfair practice that needs a change includes the order in paying debts. The cash advance and the expensive debt payments must be cleared first. There must be an increase in the amount of minimum monthly repayment tin order. It is an effective repayment transaction to clear debts while speeding up the repayment order. There should be a guideline such as making illegal practices on raising credit limits that obtains no consent. Another unfair practice that needs to be changed is the restriction of increase in interest rates.
These are the proposals that attempts of making a clearer and fair terms and conditions. But, the credit card industry had responded that this proposal will fail to offer benefits to card holders. Additionally, it can only reduce the competition within the business industry according to UK Card Associations. Through this proposal, deals may change between lenders and consumers resulting to financial difficulties.
The credit card industry has claimed and agreed to have the expensive debt cleared first that usually occurs during the payment transactions. If the proposals are agreed by both government and e-commerce industry, a proposed package will be brought forward to protect customers and card holders. The industry will provide two hundred million pounds a year for the proposed package. Also, there are reviews as part of the proposal that include financial training for shop staff. The staff in most of the shops must have the ability in selling credit over the shop counter. They should have training and be qualified in selling credit while understanding circumstances such as offering customers into debt. These are reviews on the government proposal that had an unfavorable in the part of the credit card industry.